Rural growth cushions cos from price rise hit

Dipti Jain, TNN | Dec 2, 2011, 02.19AM IST NEW DELHI: Despite high inflation hitting demand in urban areas, it's not an all-loss situation for FMCG, consumer durables and automobile companies. Most of the companies with significant presence in the semi-urban and rural India recorded decent growth in the second quarter ended September 30. Increase in demand due to rising disposable incomes, backed by a better-than-expected monsoon and a healthy harvest have led these companies to cater to this segment. Burgeoning sales in these regions may not have completely offset the impact of rising prices, but it has acted as a cushion. FMCG companies expect rural areas will account for more than 50% of sales in the next five years. Experts say that rising prices of food have benefited farmers in these areas, who are loosening their purse strings. Godrej is betting big on sales from rural areas, especially for sales of consumer goods. "Rural growth has been great for us this quarter (second) as compared to last year. The FMCG segment in particular has registered good growth in rural areas, and in some segments it has been even better than in the urban areas," said Adi Godrej, chairman, Godrej Group. Powered by increased income through schemes like NREGA and increased minimum support price (MSPs), rural customers have now begun spending increasingly on aspirational products. "The growth of sales in rural India has been around 10% higher than in urban India. On an average, 45% of our sales come from rural India, while in case of certain segments, the growth has been over 50%. We expect around 55% of our sales to come from rural India in the next three years," said Krishna Mohan, CEO, sales and marketing, Emami. The company, at present, covers close to 60,000 of the six lakh villages in the country. India's largest consumer goods maker Hindustan Unilever reported a robust 21% growth in its second quarter profits. The maker of Dove soap, Clinic shampoo and Close-Up toothpaste has been pushing rural sales through initiatives like project shakti and shaktimans. FMCG major Dabur, too, has around 50% of its sales coming from rural and semi-urban India. "While the first two quarters of this fiscal have shown urban demand outpacing rural demand, I am hopeful that rural demand is growing ahead of urban India going forward. All the indicators are there in terms of the good agri output, higher MSPs, etc," said Dabur

India CEO Sunil Duggal. Two-wheeler major Hero MotoCorp has 45% of its total sales coming from the rural markets. "Food companies have especially done well this year as monsoons have been really good. The lifestyle of people in rural areas has also changed, with people now relying more on non-cereal items for consumption. Similarly, an increase in disposable income has given rise to increase in demand of consumer durables," said Swapan Kumar Dutta, deputy general director, Indian Council of Agricultural Research.

Demand For Consumer Durables In Rural Areas

Demand For Consumer Durables In Rural Areas
DEMAND FOR CONSUMER DURABLES IN RURAL MARKET (A STUDY WITH SPECIAL REFERENCE TO INDORE DISTRICT) The Indian consumer durables segment can be segregated into consumer electronics (LCDs,LEDs,Ctvs, home theater systems,etc.) and consumer appliances (white goods) like refrigerators, washing machines, air conditioners, microwave ovens, dishwashers and small home appliances. Television, Refrigerator and Air-conditioner have penetration of around 25 per cent, 17 per cent & 4 per cent respectively in the rural . CONSUMER DURABLE INDUSTRY | ||| CONSUMER APPLIANCES | CONSUMER ELECTRONICS | WHITE GOODS | KITCHEN APPLIANCES/BROWN GOODS | CONSUMER ELECTRONICS | REFRIGERATORS | MICROWAVE OVENS | COLUR TV'S | WASHING MACHINES | CHIMANEYS | LCD TV'S | AIR-CONDITIONER'S | MIXER GRINDER'S | LED TV'S | AUDIO SYSTEMS | IRON | DVD PLAYER'S | SPEAKER'S | COOLER'S | VCD & MP3 PLAYER'S | Indias rural consumer durable market will witness Is this essay helpful? Join OPPapers to read more and access more than 600,000 just like it! get better grades an annual growth of 40 per cent in the next fiscal 2011-12, as against the current growth rate of 30 per cent owing to the change in lifestyle and higher disposable income of rural India which has fascinated the consumer durable market according to a study Rise of Consumer Durables in Rural India undertaken by the Associated Chambers of Commerce and Industry of India (ASSOCHAM). Around 35 per cent of the total sales of consumer durable items come from rural and semi-urban markets, which will grow by 40 to 45 per cent in the near future. The consumer durable industry is growing at a fast pace and sees a strong demand in the coming period with the growing affordability of products as well as general buoyancy in the economy, According to ASSOCHAM. The market for consumer durables is estimated at Rs. 300 billion and is expected to reach Rs. 500 billion by 2015. The urban consumer durables market is growing at an annual rate of nine to 12 per cent, the rural durables market is growing at 30 per cent...